COUNCIL tenants in Hyndburn are facing an average £58 per year rise in rents.

But the council says the 2.35 per cent increase could have been worse after the Government proposed a 3.25 per cent rise. The hike will bring average weekly rental on a council house in the borough to £45, from just under £44, and will bring in an extra £175,000 income for the council's housing revenue account.

A full meeting of the council approved the increase, which will take effect from April 1. A council spokesman said the annual increase on the 3,600 houses was due to inflation.

Coun Jean Battle, portfolio holder for housing, said: "The level of rent we can charge is limited by the rent restructuring regime, which affects all housing associations and council landlords.

Rents are calculated according to a Government formula adopted by Hyndburn last year, based on a Government-led 10-year rent restructuring programme launched in 2000 for local authorities and registered social landlords.

The formula is based 70 per cent on manual earnings in Lancashire and 30 per cent on property values in the area.

Low property values in the borough brought the Government's proposed figures down.

The council is considering whether to sell off its 3,600 houses, saying it could cost up to £15 million to bring them up to national standards. Hyndburn has an annual budget of only £2million for repairs -- not enough to meet the government's decency standard for council homes.

The council is considering setting up a private company to run its housing stock, similar to Blackburn with Darwen Council's Twin Valley Homes.

Other options include transferring the stock to a housing association. A decision is expected in the summer.